Episode 66: Building a business with your best friend

In a world where many believe friends and business partners don’t mix, Emily Moon and Kelsey Carlstedt are living and thriving proof. And even though they live across the country from each other, these co-founders of By Grace Designs, are practically inseparable.

Their mission: raise women up through the power in their hearts and hands. Teaching them how to sew and giving them work creating beautiful garments — each piece of clothing with the By Grace label and a label with the person’s name who made it, like By Lydia.

It’s a wonderful nonprofit small business making a real difference, including giving a percentage of every sale and donations to poor communities in their employees’ home countries of Ghana and India. Xero Gravity 66. Don’t miss a single minute!

Episode transcript

Host: Elizabeth Ü [EÜ]

Guests: Emily Moon (EM), Kelsey Carlstedt (KC)

EÜ: Hi everyone. I'm Elizabeth Ü and this is Xero Gravity.

Meet Emily Moon and Kelsey Carlstedt. They're best friends and business partners. In some ways they represent yin and yang, yet they definitely share a passion for employment, empowerment and education which they bring to the rest of us through a business they co-founded, called, By Grace Designs.

EM: It's about raising up women and just saying, "Hey, you have something really incredible to offer this world." We both feel very strongly that we've been brought together as friends for a purpose and this is just such a strong part in calling on our lives.

KC: That's the difference about running a small business that you're really passionate about. This isn't just a job. This isn't just a hobby. This isn't just a small business. Like this is our calling and we have women who are depending on us.

EÜ: They'll talk to us about the challenges of running a business, while maintaining a healthy friendship and working relationship.

EM: It’s difficult. And it definitely has changed our relationship for sure. You know, we went from talking about boys and what our plans were for the weekend and what we did that day to, you know, here is our projections, here's who we have to talk to, here's this opportunity that just came up. And so it definitely changes the relationship for sure.

EÜ: What kind of interpersonal struggles do you experience? I mean I imagine being best friends, not only do you really appreciate certain things about each other, but there's probably things that drive you totally bonkers about working with each other.

KC: I think when you're working with your best friend, you know their flaws and their weaknesses, so you know what buttons to push. Like you know, "that's what I could say that could really hurt her." Or "Like that's something I shouldn't do, but I'm probably going to do anyways." But I also think that when it's that personal, there are added expectations. Because If you're just my co-worker, I'm going to be like, "Okay, fine, don't get to it." If it's your best friend you're like, "I know what you're doing on Friday night. I saw on your Instagram that you did this."

[Laughs] Like one time I was so mad at Emily because I was like, "You didn't respond to my email for two days." She's like, "I was sick. I was sick." I was like, "You went out to a birthday party on Saturday night." She was like, she was like, "Kelsey, that was a late post. That was a late post, okay? I was posting from my bed.” I'm like, "I don't believe that."

EÜ: Oh no!

KC: So you don't have that problem with somebody who’s not like your best friend and you're not calling them out for what they're posting on social media.

EÜ: What about arguments about who's doing more work? I mean I imagine at some points Emily you're doing more work or some points Kelsey you're doing more. But does it generally feel balanced or do you have an understanding that, you know, one of you is going to put in X amount of hours and the other is going to do something different, or is it always the same?

EM: Yeah, I know. We had a lot of struggles about that because since we are in different cities, a lot of us doesn't always see the work that goes into it and when you're in different fields, you don't always understand. Okay so you send this over, this document over, but there's no understanding of how long it took to put that together on both sides because we don't do what the other person does, right?

So once you define those roles and those expectations, there's no question of who's doing work and who's not because you know exactly what they're doing and how much work goes into that.

EÜ: One of my mentors, Jake Cohen Gilbert, always said that you can’t be an engine for social change without being an engine first. So I'm curious which one of you has more of the business experience or who's crunching the numbers to make sure that you actually are turning a profit, so that you can maximize this impact that you want to have in the world.

KC: Up until this point it's been mostly me crunching the numbers, but within the last six months, Emily and I have started to do everything together in that capacity, so that we're both invested in the financial side of things. Because I would say, "We can't spend that much on shipping." And she'd be like, "I don't know why… like because..." Like I wouldn’t fully explain to her because Emily is a marketing genius and I am much happier to sit back with my Excel spreadsheets and say, "This is how much we can’t spend, and this is our profit margin, and this is what we have to do so that we can put this amount of money back into the workshop."

But where we are now, we've started to budget everything together. And we've started to make very, very clear financial plans. Because turning a profit is important and turning that profit so that we are improving the lives of women around the world is the most important thing for us.

EÜ: What inspired you to start a business together? I mean there are so many other things that you might have done to craft the lives that you wanted.

EM: So, I grew up in Ghana, West Africa and it was honestly something that I used to never tell people just because, I don’t know, it was something that I wasn't totally comfortable always with sharing. My parents were missionaries there. The state of poverty that hard for me to understand that I actually did live there. Sometimes I almost feel like I lived two lives just because of how vastly different they are.

So I grew up in an area of the world that — it's called the 10/40 window. It holds a really large majority of the world's population and 85% of it is the poorest of the world's poor. And so the lack of opportunity is really, really devastating. I remember one Christmas, my neighbor was a neighbor that I was friends with and we were talking and I had asked her what she had gotten for Christmas. And she told me that she gotten a package of raw spaghetti noodles for Christmas to split with her and her siblings. And I remember that moment, and just that's something that actually really broke my heart, even though I was so young at that time.

And so coming over to the States, I went through a lot of culture shock just adjusting to this different, totally different environment and different atmosphere. It was something that I could never get out of my mind.

KC: And Emily would rave about these fabrics and she liked to wear colors and I didn't. But she was obsessed, obsessed with the Ghanaian prints. And she's like, "I just want to bring them back. I don't know what I want to do with them. Do I want to make them into curtains or pillows or dresses."

And then slowly we started to talk and I would say, "Oh well, what if we like employed women to make them?" She's like, "Oh my gosh, I know women who know how to sew and could actually make these dresses. They make really cool dresses there." And I would say, "What if we tried to sell them to girls here, and they don’t know anything about what's going on in Ghana or third world poverty." And she would be like, "I'm really passionate about poverty." I mean we were kids. We didn't really know what we were talking about at the point.

KC: And we were like, this is something that actually needs to happen because we are surrounded by women in America specifically who, all they care about is fashion. All they care about is who they're wearing, what they're wearing, what they're wearing tonight, who they're going out with, and what they're going to see, if they're going to compare their outfit to so-and-so's outfit. We could actually do something meaningful and impactful and empowerment wouldn't just be this large word that grownups said. It's something that we could actually have a hand in.

EÜ: So I'm curious, how long have you two known each other?

KC: Well we've been saying 10 years for a really long time but we actually, we met in the 6th grade but we weren't actually friends until the 8th grade because we were opposites.

EM: Yeah. We were total opposites like just at everything. You know, I would wear pastels and I was blonde and Kelsey was you know, brunette and pretty much always in black.

Then at 8th grade we were placed into this thing called office aide. And basically, what you did was you were paired with a partner and you ran office errands for the entire block. And so Kelsey and I did that together and ever since then, we were absolutely inseparable in high school.

KC: We definitely learnt to appreciate the differences and it made everything a little bit more entertaining.

EÜ: And Kelsey, what were some of the other differences that you noticed or that you maybe still notice in each other?

KC: Emily is the most happy bubbly person you've ever met. Like she will talk to anyone. She loves people. She is super outgoing. Like she is always willing to do anything, whatever, she is your perfect yes person. And I am not a yes person. I'm like, "No, we're good.” I don't really need to interact with any other people." And she’s so so good at initiating conversations and I am not. Like Emily will always, always keep you laughing. And I think that that's like something that was so important for me and the reason that we're still friends now is because she kept everything entertaining and she always kept new things happening.

EM: For me I'm like, "Okay, let’s do it. Let’s just jump in." I'm a super passionate person. But Kelsey was always the one to be like, "Let’s sit down, and think about this. Let’s actually put some thought to it."

I think I was just drawn in first of all by just how authentic she was and just how true to herself that she was.

EÜ: What did the two of you get up to when you were together?

KC: We were dreamers. I mean we started talking about By Grace when we were in 8th grade. In the lunchroom, I can remember talking about Emily growing up in Ghana and talking about starting a company together. And we both knew we wanted to do something meaningful with our life and we would spend so many hours like sitting at my family's kitchen table or her family's kitchen table. We played tons of board games. We'd talk about who we wanted to be, where we wanted to be, how we were going to get there. Magically we've never lived in the same place since she moved to South Dakota. And we still talk, every day on the phone or G-Chat or text messaging or in constant communication.

EÜ: Kelsey, I'm curious for you especially. What kind of reactions do you get when you explain the mission and the goal you have for your business because here for Emily, this really comes from a part of her past and a very visceral experience that she had growing up amongst so much poverty. But when you describe it to the people in your world especially — having had some time that you spent in LA — do people understand what it is that you're trying to do?

KC: I think more and more so people are understanding because as cliché as it sounds, like we are living in a post Tom's generation. So people are starting to understand what it means to buy conscientiously, because for me, I work in the fashion industry now. I'm in LA every day and I grew up with my mum's best friend, actually ran an orphanage in Ghana as well. So I always had ties with Ghana.

EÜ: Oh, wow!

KC: Yeah.

EÜ: Even before Emily?

KC: Even before Emily. And we used to donate clothes to orphanages growing up. It was very important to my mum that we didn't just give them the clothes we outgrew but we gave the kids clothes that we cherished. So if I had a favorite dress, she wanted me to give that to someone to show that clothes were fleeting but relationships and people, that's what mattered.

So following Tom’s, what you have is people who are willing to spend a little bit more knowing that their money is going to a good cause. Following the Michelle Obama’s and the Hillary Clinton’s and whatever you have to say about politics, you're finally seeing women in power who are speaking out about what's going wrong with the education system or what's going wrong with women.

So I've never had anybody say like that was stupid. Literally every person who I've told about the idea is like, "Great, you're educating, employing, empowering women in the 3rd world. Where can I sign up? Where can I donate? Where can I buy a skirt? Where can I buy a dress?"

Because people do want to make a difference. They just need to know that it's possible and they need a specific way. If someone thinks, "Okay, I can buy a skirt and this skirt is going to help someone buy a sewing machine so that they can help feed their family." That's tangible to them.

EÜ: Right, right. When I think the fact that you're making it tangible to them is really a testament to the story telling that you are doing to make people understand exactly what's happening with By Grace Designs. Maybe you can tell a little bit about the story of choosing that name.

KC: That's all Emily.

EM: And honestly, I'm not quite sure if I completely remember. But I do remember sitting in a meeting and I was just thinking about it and Kelsey and I had been discussing, you know, "What are we going to call it? What are we going to call it?" And I was just like, "By Grace. It has to be By Grace." And it has a little bit of a dual meaning. It represents a Bible verse, "For it is by grace that you have been saved." And it also represents my middle name is Grace as well.

KC: Well it's important to us that the human side of what we're creating is presented to our customers. So all of our garments come with a little tag that has a By Grace logo on it. Then it also says By Lemisi or By Lydia or By Debra, whomever sewn the garment, their name is on there. So that there is a little bit more of a connection to the consumer here in the western world to who's actually sewn the garment that they're wearing. So there's multiple meanings.

EÜ: It's funny because I can imagine you doing this if you were sitting around a table together, but the fact that you live in different states, can you describe a little bit about what this long distance working relationship looks like on a day-to-day basis?

EM: Yeah. I mean, it's tough. Proximity is so key. But we also work with women who are in Ghana and India. So it's definitely not ideal but we do whatever we have to do to make it work, you know. So whether that's staying up until 3:00am or Skype-ing or video-ing. Whatever we have to do, we do.

KC: I think we are at an advantage being in the time and era that we are now. I think if it would have been 10 or 15 years ago, we couldn't do what we’re doing now. But if we need to hop on Facetime, and pull up a dress and be like, "Okay, I got this shipment in. What do you think of this fabric?" Or, "Look at this stitching." I mean we’re sending pictures back and forth to each other all day. Every time we get a shipment it's like, oh, "There was a pin in this, or oh this seam was uneven." Or, "Do you like this coloring?"

And we are constantly able to communicate with one another. We both still work and we WhatsApp and we are texting and G-chatting and calling each other at the same time. Like sometimes we go, "I am responding to your text, can you not call me right now? [laughing] I am talking to you.”

We've had that conversation of if we want to grow, if we want to get to the next phase, does one of us pick up and move across the country. But where we are now, we're willing to do whatever it takes because we’re so embedded in our individual communities that we feel like we can make an impact here, and we can reach out to the women here and start to really make a difference in their lives too.

EÜ: You've mentioned the word partnership so many times. And as far as actual formal business entity, are you organized as a partnership? Or do you have a different entity set up?

KC: No, we're not a partnership. We're a 501c3 corporation.

EÜ: Wow!

KC: Mostly because it benefits us for tax purposes. So that was actually something that took us a really long time to figure out what we were going to do. Should we be a nonprofit, should we be a for-profit, should we be a corporation, should we be a partnership? And I worked in Venture Capital for a while. So I spent a lot of time talking to people about what worked for them and what didn't. At the end of the day, Emily and I came to the conclusion that what matters to us is being able to give back as much money as possible to these women so that we are continuing the cycle of educating girls so that we can employ them, so that we can elevate them out of this generational poverty.

That is our number one goal. And the best way for us to do that, is to be tax exempt. So people can make donations if they want to, but also so that we are funneling as much money as possible into these local communities.

EM: And so I think it really just came back to what is our heart, you know. Why are we doing what we're doing?

Profit is the result, right? And that's super important, you have to make a profit because if you don't make a profit, you're not going to help anybody. But the whole core as to what gets us out of bed every morning, what keeps us working two jobs so that, you know, we can fuel By Grace, it's not money. You know, that's not going to sustain anybody.

EÜ: What do you wish you had known then about working with your best friend now that you've been doing it for a couple of years? More than a couple of years at this point.

KC: I would say define your parameters — like what you expect of the other person. Because if the other person knows from the beginning what you are expecting to see from them, I think they will deliver. Whereas if you leave that ambiguous, like grey area, where you're like, "I thought you were going to do that."

EM: Just clear expectations of what is your responsibility, what is your role. I think in the beginning, Kelsey and I were a partnership. You know, we were one unit. And so we thought, we'll just divvy it up as it goes. You know, you'll take what you're good at, I'll take what I'm good at and we'll balance each other out. But you know, we just kind of learned that we needed a little bit more structure.

EÜ: And have you given any thought to the possibility that one or the other of you might at some point not want to be part of By Grace Designs?

KC: I don't see that happening.

EÜ: That's like a blasphemous statement.

EM: I don't think it would ever happen, honestly. I think it's so much ingrained as a part of who we are and just our passion, that I don't know if I could ever separate myself from that.

KC: I mean I think it's a fair question because I will not lie and say that every day I wake up like super stoked to balance the numbers and I'm so excited to negotiate shipping rates. Because there are days that I'm like, "I give up. I absolutely, 100% do not want to do this anymore. Whoever said that running your own business was a great idea was an idiot. I just want to be a part of the corporate cycle. And I want somebody to pay my health insurance. I'm done. I'm just done."

And at the end of the day, no matter how hard it is, or no matter how frustrating it is, that is such a purpose and there are now people relying on me and that makes me feel like a grownup. And I know that Emily has the same thing. We both have these moments of like, "What did we get ourselves into?"

But because of that, this isn't the kind of company that you build up so that you can have a grand exit strategy. This isn't the kind of company that you're trying to sell or merge or develop into something else which again goes back into the nonprofit model. And this is our heart, and these are people and real relationships and we both feel so strongly that we can make a difference and we're right where we need to be. That that's what makes it worth it.

EÜ: And so let’s say 20 years from now, you're looking back. You're patting yourselves on the back for having succeeded wildly beyond your expectations. How will you know that you succeeded?

EM: That’s a good question.

KC: I mean we both have kind of different visions. But I see us in 10 different countries. Countries that haven't been touched by other companies doing what we're doing. Where we are fully educating, fully employing girls in the art of sewing, but also that we’re able to offer scholarships to girls to pursue whatever it is that their dream is.

That we can help actually fund full educations. Right now we’re so small that we can't offer like a full scholarship to university for anyone. I hope that one day, we are absolutely able to do that. And I also hope that we've become part of the social conversation in America. I hope girls are saying, "Oh where did you get that? Oh this is a By Grace original. By Grace? I love By Grace. I love that company. I love the women who they've impacted. Did you hear about so and so? Did you hear about you know, little Lucy? Lucy went to design and fashion school in Accra, Ghana and she never would have been able to do that without By Grace. I feel better wearing that skirt."

EM: I remember a conversation that we had with one of the women and she told us that when she sold the very first thing that she had made with her hands, she couldn't believe that somebody had actually bought it. And she said, "I couldn't believe somebody bought something that I made. It made me feel worthy." And it just hit me so hard, that feeling of we are not just selling skirts. But we're telling women who have never been told this before. That you are worthy and that you have something to offer, and you have a skill and you have a mind and you have traits that other people want to see and know and learn more about.

You’re not just doing business with people who need what you have. You're doing business with people who believe, and so you’re inspiring this change. Not just in Ghana with those who are sewing the garments or making them, but over in the U.S. too.

EÜ: Well, that's such a beautiful vision. Thank you so much for sharing your story of By Grace Designs and being in business as best friends.

We're going to finish up with our question countdown which is five quick questions and five quick answers. Are you ready?

EM: Ready.

KC: Yes.

EÜ: What business book or idea made the biggest impact in your life and why?

EM: Mine was or is The Poverty Cure. And it totally changed how I thought about poverty and the solution to addressing it.

KC: Mine is Think and Grow Rich by Napoleon Hill. It changed my idea of how ideas can manifest and how you can actually make things come into reality.

KC: WhatsApp just makes sure that we're constantly connected to our seamstresses and to our buyers, that if they're in a market and they need to get a hold of us, they have a medium that's inexpensive and allows us to be connected immediately.

EÜ: And in one sentence, what's the greatest lesson you've learned throughout your small business journey?

EM: Failure is the prelude to success. And this is something that one of our advisors told us. And what I got out of it was just never give up and always go for it because either high risk victory or defeat because not knowing is worse than either of those.

KC: I wrote the same sentence because apparently we have more in common than we thought. I mean that's the one thing that we will say to each other to encourage one another. Like failure is the prelude to success. Like allow yourself to take risks because in those moments, like whether you're succeeding or failing, both outcomes are going to be useful.

EÜ: Finally, what skill do you want to enhance this year?

EM: A lot. I guess one of my skills, what I want to enhance professionally would be to work a lot more on SEO. I think that that's a really, really important skill.

KC: I want to work on my social media presence. Like I can't even like my own friends' Instagram photos, which doesn't make for a very good business social media.

EÜ: Oh no!

KC: So I'm like an 80 year old woman. I'm like, "Oh Twitter, how many characters do I get?"

EÜ: Well, if you start listening through some of the Xero Gravity podcast episodes, we have lots of help for you there on both SEO and social media.

This has been a really fun conversation with the two of you and I can't wait to check out some of your beautiful patterns and cuts on your website.

KC: Well thank you for having us, we really appreciate it.

EM: Yeah, thank you so much for having us.

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EÜ: That was Emily Moon and Kelsey Carlstedt. Best friends and co-founders of By Grace Designs. Thanks for listening to Xero Gravity. Make sure you join us next week when we'll be chatting with Nicole Cullen about conflict resolution and dealing with disputes in business. Nicole will join us to share practical tips from her experience as a mediator, dispute resolution expert and small business owner, herself. Have a great week and we'll see you then.